BP shares creep up as Chief Executive negotiaties departure

26 July 2010 / by Lois Avery

BP shareholders are likely to suffer further setbacks following the news that Chief Executive Tony Hayward is negotiating his exit package.

Nearly four months after the Deepwater Horizon oil rig explosion BP’s boss has given into pressure and looks likely to leave his post this week.

Talks are underway to agree his settlement, which could include a pension pot worth up to £13 million.

But rumors of a multi million pound payout have angered investors and will provoke criticism from US politicians who have already pressured BP over their handling of the costly cleanup operation.

The news will also affect U.K. shareholders who are likely to have to forgo dividend payments, which are forecast to fall for a second year after BP Plc canceled $7.5 billion of shareholder payouts to help fund the cost of cleaning up its Gulf of Mexico oil spill.

Capita Registrars Dividend Monitor said in a statement: “With the economy emerging slowly from recession, corporate profitability is improving, but dividend growth is still anaemic.

“There is a lag as companies seek to ensure solid recovery before lifting their payouts at the end of a financial period.”

However, despite the new blow to shareholders BP shares continue to be a top pick for investors who are making the most of BP’s weakened share price.

As noise around the BP oil spill continues, investors are seeing buying opportunities in the company's shares. News of Tony Hayward’s departure forced the share price up 3 per cent today and in recent weeks the price has risen, after hitting a 14 year low in April immediately after the disaster.

But some experts are warning that the run on BP shares could be short lived. Speaking to the FT Adviser PSigma Income manager Bill Mott said: “My hunch is that BP is probably too cheap but we have resisted any temptation to buy any more on risk grounds. Although this was tempting, we felt the risk was too high.”